factual

What does the Mrcool franchise agreement define as 'Prohibited Activities' during the franchise relationship?

Mrcool Franchise · 2025 FDD

Answer from 2025 FDD Document

Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any business or customers from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a MRCOOL Center; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and, collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and, would cause harm to Franchisor, the System and other MRCOOL Center franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.

Source: Item 23 — RECEIPTS (FDD pages 55–263)

What This Means (2025 FDD)

According to Mrcool's 2025 Franchise Disclosure Document, the franchise agreement outlines specific activities that a franchisee is prohibited from engaging in during the term of the agreement. These 'Prohibited Activities' are designed to prevent unfair competition and protect Mrcool's interests, its affiliates, and other franchisees within the system.

The prohibited activities include owning or having any legal or equitable interest in a Competitive Business, with a minor exception of owning 3% or less in a publicly traded company that is a Competitive Business. Franchisees are also barred from operating, managing, funding, or performing services for a Competitive Business, whether as an employee, officer, director, manager, consultant, agent, or creditor.

Furthermore, franchisees are prohibited from diverting or attempting to divert any business or customers from Mrcool or its affiliates or franchisees. They cannot induce any customer or client of Mrcool, its affiliates, or other franchisees to any other business that is not a Mrcool Center. Lastly, franchisees must not engage in any actions that violate specific articles within the franchise agreement related to these restrictions. Engaging in these Prohibited Activities would be considered unfair competition and would cause harm to Mrcool and its franchise system. These restrictions also apply to the franchisee's Owners and Spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.